Indian Finance Minister Nirmala Sitharaman has voiced her anticipation for the G20, a coalition of 19 sovereign nations, along with the European Union (EU) and the African Union (AU)—to formulate a regulatory framework for cryptocurrencies.
Call for Regulatory Consensus
Sitharaman emphasized that cryptocurrencies primarily serve as instruments for trading, speculation, and profit-seeking ventures, distinct from conventional currencies issued by central banks.
She stressed that the absence of regulatory measures carries global ramifications, given cryptocurrencies’ potential impact on cross-border transactions and their susceptibility to illicit activities such as drug trafficking and terrorism.
Sitharaman has actively engaged in G20 dialogues aimed at addressing the challenges posed by crypto assets, advocating for a unified international regulatory framework. She underscored the significance of collaborative efforts in crafting robust regulations capable of effectively managing the risks associated with cryptocurrencies.
RBI Governor Cautions Against Crypto Risks
The Indian government has embraced blockchain technology while maintaining reservations regarding cryptocurrencies due to their volatility and speculative nature.
In India, cryptocurrencies lack legal tender status, with no specific regulations governing them at present. The recent proposal of the Cryptocurrency and Regulation of Official Digital Currency Bill reflects the government’s call for minimal cryptocurrency regulations, underlining the importance of global consensus through international cooperation.
Cautious Approach of the Reserve Bank of India (RBI)
The Reserve Bank of India (RBI) has adopted a prudent stance towards cryptocurrencies, emphasizing regulatory caution to safeguard financial stability. RBI Governor Shaktikanta Das expressed concerns in 2022 regarding the lack of inherent value in cryptocurrencies and underscored the imperative of upholding financial stability amidst their increasing global popularity.
Preserving Financial Sovereignty
According to Crypto News, the RBI’s cautious strategy aims to protect India’s financial sovereignty and mitigate potential disruptions to the banking system arising from unregulated cryptocurrency activities. Through issuing warnings and advocating regulatory prudence, the RBI seeks to uphold resilience and security within India’s financial ecosystem amid evolving digital asset landscapes.
A Bitcoin.com News report states that Sitharaman stressed the importance of central bank issuance for currencies, highlighting that cryptocurrency functions primarily as an asset designed for speculation, trading, or various other purposes. She noted that cryptocurrency remains unregulated in India.
Continued Vigilance
Governor Das cautioned against the inherent risks associated with cryptocurrencies while maintaining the RBI’s vigilant approach to addressing emerging risks and challenges. Despite this, the RBI remains open to exploring the potential introduction of a central bank digital currency (CBDC) while prioritizing the maintenance of financial stability and security.
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